OP Corporate Bank plc's Interim Report for 1 January-31 March 2017

Consolidated earnings before tax were EUR 133 million (111). The return on equity was 11.1% (9.7).

Banking earnings before tax increased to EUR 82 million (51) due to higher net investment income and net interest income. The loan portfolio increased in the year to March by 14.7% to EUR 18.9 billion.The cost/income ratio was 32% (38).

Other Operations earnings before tax were EUR 9 million (1). Liquidity and access to funding remained good.

The CET1 ratio was 14.6% (14.9), while the target was 15%.

Unchanged outlook: OP Corporate Bank Group's consolidated earnings before tax are expected to be about the same as or lower than in 2016.

Q1/2017

Q1/2016

Change, %

Q1-4/2016

Earnings before tax, EUR million

Banking

82

51

60.4

260

Non-life Insurance

42

59

-28.3

231

Other Operations

9

1

13

Group total

133

111

20.0

504

Comparatives deriving from the income statement are based on figures reported for the corresponding period a year ago. Unless otherwise specified, balance-sheet and other cross-sectional figures on 31 December 2016 are used as comparatives.

Financial targets

Q1/2017

2016

Target

Customer experience, NPS (-100-+100)

67

58

70, over time 90

Common Equity Tier 1 (CET1) ratio, %

14.6

14.9

15

Return on economic capital, %

17.7

17.0

22

Expenses of present-day business, EUR million

489

471

Expenses in 2019 lower than in 2015(475)

Dividend payout ratio, %

-

50.4

50

Outlook towards the year end

The world economy and world trade showed a marked recovery in the first quarter. Economic growth in the euro area too picked up. Recovery in the export market made a strong contribution to Finnish exports. On the whole, the Finnish economic outlook has brightened in the first quarter and is now more optimistic than for many years. Consumer confidence has improved and the housing market has perked up. Political uncertainty both in export markets and Finland is still, however, casting a shadow over economic recovery.

The financial sector has had to adjust to a new type of low interest rate environment. Low interest rates retard growth in banks' net interest income and erode insurance institutions' income from fixed income investments. Impairment losses have remained low despite the slow growth that has lasted for several years now. The most significant strategic risks in the financial sector are currently associated with changing customer behaviour and operating environment digitisation. Industry disruption is threatening to slow down growth and erode income generation in the years to come. In the next few years, the financial sector will be faced with a strong need to reinvent itself. Changes in the operating environment will emphasise the role of the management of operational reinvention, profitability and capital adequacy with a long-term approach.

OP Corporate Bank Group's consolidated earnings before tax are expected to be about the same as or lower than in 2016. The most significant uncertainties affecting earnings relate to changes in the interest rate and investment environment, impairment loss on receivables, the rate of business growth and the effect of large claims on claims expenditure.

All forward-looking statements in this report expressing the management's expectations, beliefs, estimates, forecasts, projections and assumptions are based on the current view of the future development in the operating environment and the future financial performance of OP Corporate Bank Group and its various functions, and actual results may differ materially from those expressed in the forward-looking statement.

Helsinki, 27 April 2017

OP Corporate Bank plc Board of Directors

Financial reporting in 2017

OP Corporate Bank plc publishes the following financial information pursuant to the regular disclosure obligation of a securities issuer:

OP Corporate Bank is part of the leading Finnish customer-owned financial services group, OP Financial Group. OP Corporate Bank and OP Mortgage Bank are responsible for OP's funding in money and capital markets. As laid down in the applicable law, OP Corporate Bank, OP Mortgage Bank and their parent company OP Cooperative and other OP Financial Group member credit institutions are ultimately jointly and severally liable for each other's debts and commitments. OP Corporate Bank acts as OP's central bank.